The procedure for granting patents, requirements placed on the patentee, and the extent of the exclusive rights vary widely between countries according to national laws and international agreements. Typically, however, a granted patent application must include one or more claims that define the invention. A patent may include many claims, each of which defines a specific property right. These claims must meet relevant patentability requirements, such as novelty, usefulness, and non-obviousness.[2][3]

Under the World Trade Organization's (WTO) TRIPS Agreement, patents should be available in WTO member states for any invention, in all fields of technology, provided they are new, involve an inventive step, and are capable of industrial application.[4] Nevertheless, there are variations on what is patentable subject matter from country to country, also among WTO member states. TRIPS also provides that the term of protection available should be a minimum of twenty years.[5]

The word patent originates from the Latinpatere, which means "to lay open" (i.e., to make available for public inspection). It is a shortened version of the term letters patent, which was an open document or instrument issued by a monarch or government granting exclusive rights to a person, predating the modern patent system. Similar grants included land patents, which were land grants by early state governments in the USA, and printing patents, a precursor of modern copyright.

The Venetian Patent Statute, issued by the Senate of Venice in 1474, and one of the earliest statutory patent systems in the world.

Although there is some evidence that some form of patent rights was recognized in Ancient Greece in the Greek city of Sybaris,[8][9] the first statutory patent system is generally regarded to be the Venetian Patent Statute of 1474. Patents were systematically granted in Venice as of 1474, where they issued a decree by which new and inventive devices had to be communicated to the Republic in order to obtain legal protection against potential infringers. The period of protection was 10 years.[10]. As Venetians emigrated, they sought similar patent protection in their new homes. This led to the diffusion of patent systems to other countries.[11]

The English patent system evolved from its early medieval origins into the first modern patent system that recognised intellectual property in order to stimulate invention; this was the crucial legal foundation upon which the Industrial Revolution could emerge and flourish.[12] By the 16th century, the English Crown would habitually abuse the granting of letters patent for monopolies.[13] After public outcry, King James I of England (VI of Scotland) was forced to revoke all existing monopolies and declare that they were only to be used for "projects of new invention". This was incorporated into the Statute of Monopolies (1624) in which Parliament restricted the Crown's power explicitly so that the King could only issue letters patent to the inventors or introducers of original inventions for a fixed number of years. The Statute became the foundation for later developments in patent law in England and elsewhere.

Important developments in patent law emerged during the 18th century through a slow process of judicial interpretation of the law. During the reign of Queen Anne, patent applications were required to supply a complete specification of the principles of operation of the invention for public access.[14] Legal battles around the 1796 patent taken out by James Watt for his steam engine, established the principles that patents could be issued for improvements of an already existing machine and that ideas or principles without specific practical application could also legally be patented.[15] Influenced by the philosophy of John Locke, the granting of patents began to be viewed as a form of intellectual property right, rather than simply the obtaining of economic privilege.

The English legal system became the foundation for patent law in countries with a common law heritage, including the United States, New Zealand and Australia. In the Thirteen Colonies, inventors could obtain patents through petition to a given colony's legislature. In 1641, Samuel Winslow was granted the first patent in North America by the Massachusetts General Court for a new process for making salt.[16]

The modern French patent system was created during the Revolution in 1791.[18] Patents were granted without examination since inventor's right was considered as a natural one. Patent costs were very high (from 500 to 1,500 francs). Importation patents protected new devices coming from foreign countries. The patent law was revised in 1844 - patent cost was lowered and importation patents were abolished.

The first Patent Act of the U.S. Congress was passed on April 10, 1790, titled "An Act to promote the progress of useful Arts".[19] The first patent was granted on July 31, 1790 to Samuel Hopkins for a method of producing potash (potassium carbonate). A revised patent law was passed in 1793, and in 1836 a major revision to the patent law was passed. The 1836 law instituted a significantly more rigorous application process, including the establishment of an examination system. Between 1790 and 1836 about ten thousand patents were granted. By the Civil War about 80,000 patents had been granted.[20]

A patent does not give a right to make or use or sell an invention.[21] Rather, a patent provides, from a legal standpoint, the right to exclude others[21] from making, using, selling, offering for sale, or importing the patented invention for the term of the patent, which is usually 20 years from the filing date[5] subject to the payment of maintenance fees. From an economic and practical standpoint however, a patent is better and perhaps more precisely regarded as conferring upon its proprietor "a right to try to exclude by asserting the patent in court", for many granted patents turn out to be invalid once their proprietors attempt to assert them in court.[3] A patent is a limited property right the government gives inventors in exchange for their agreement to share details of their inventions with the public. Like any other property right, it may be sold, licensed, mortgaged, assigned or transferred, given away, or simply abandoned.

A patent, being an exclusionary right, does not necessarily give the patent owner the right to exploit the invention subject to the patent. For example, many inventions are improvements of prior inventions that may still be covered by someone else's patent.[21] If an inventor obtains a patent on improvements to an existing invention which is still under patent, they can only legally use the improved invention if the patent holder of the original invention gives permission, which they may refuse.

Some countries have "working provisions" that require the invention be exploited in the jurisdiction it covers. Consequences of not working an invention vary from one country to another, ranging from revocation of the patent rights to the awarding of a compulsory license awarded by the courts to a party wishing to exploit a patented invention. The patentee has the opportunity to challenge the revocation or license, but is usually required to provide evidence that the reasonable requirements of the public have been met by the working of invention.

In most jurisdictions, there are ways for third parties to challenge the validity of an allowed or issued patent at the national patent office; these are called opposition proceedings. It is also possible to challenge the validity of a patent in court. In either case, the challenging party tries to prove that the patent should never have been granted. There are several grounds for challenges: the claimed subject matter is not patentable subject matter at all; the claimed subject matter was actually not new, or was obvious to experts in the field, at the time the application was filed; or that some kind of fraud was committed during prosecution with regard to listing of inventors, representations about when discoveries were made, etc. Patents can be found to be invalid in whole or in part for any of these reasons.[22][23]

Patent infringement occurs when a third party, without authorization from the patentee, makes, uses, or sells a patented invention. Patents, however, are enforced on a nation by nation basis. The making of an item in China, for example, that would infringe a U.S. patent, would not constitute infringement under US patent law unless the item were imported into the US.[24]

Patents can generally only be enforced through civil lawsuits (for example, for a U.S. patent, by an action for patent infringement in a United States federal court), although some countries (such as France and Austria) have criminal penalties for wanton infringement.[25] Typically, the patent owner seeks monetary compensation for past infringement, and seeks an injunction that prohibits the defendant from engaging in future acts of infringement. To prove infringement, the patent owner must establish that the accused infringer practises all the requirements of at least one of the claims of the patent. (In many jurisdictions the scope of the patent may not be limited to what is literally stated in the claims, for example due to the doctrine of equivalents).

An accused infringer has the right to challenge the validity of the patent allegedly being infringed in a counterclaim. A patent can be found invalid on grounds described in the relevant patent laws, which vary between countries. Often, the grounds are a subset of requirements for patentability in the relevant country. Although an infringer is generally free to rely on any available ground of invalidity (such as a prior publication, for example), some countries have sanctions to prevent the same validity questions being relitigated. An example is the UK Certificate of contested validity.

Patent licensing agreements are contracts in which the patent owner (the licensor) agrees to grant the licensee the right to make, use, sell, and/or import the claimed invention, usually in return for a royalty or other compensation. It is common for companies engaged in complex technical fields to enter into multiple license agreements associated with the production of a single product. Moreover, it is equally common for competitors in such fields to license patents to each other under cross-licensing agreements in order to share the benefits of using each other's patented inventions.

In most countries, both natural persons and corporate entities may apply for a patent. In the United States, however, only the inventor(s) may apply for a patent although it may be assigned to a corporate entity subsequently[26] and inventors may be required to assign inventions to their employers under an employment contract. In most European countries, ownership of an invention may pass from the inventor to their employer by rule of law if the invention was made in the course of the inventor's normal or specifically assigned employment duties, where an invention might reasonably be expected to result from carrying out those duties, or if the inventor had a special obligation to further the interests of the employer's company.[27]

The plate of the Martin ejector seat of a military aircraft, stating that the product is covered by multiple patents in the UK, South Africa, Canada and pending in "other" jurisdictions. Dübendorf Museum of Military Aviation.

The inventors, their successors or their assignees become the proprietors of the patent when and if it is granted. If a patent is granted to more than one proprietor, the laws of the country in question and any agreement between the proprietors may affect the extent to which each proprietor can exploit the patent. For example, in some countries, each proprietor may freely license or assign their rights in the patent to another person while the law in other countries prohibits such actions without the permission of the other proprietor(s).

The ability to assign ownership rights increases the liquidity of a patent as property. Inventors can obtain patents and then sell them to third parties.[28] The third parties then own the patents and have the same rights to prevent others from exploiting the claimed inventions, as if they had originally made the inventions themselves.

The grant and enforcement of patents are governed by national laws, and also by international treaties, where those treaties have been given effect in national laws. Patents are granted by national or regional patent offices.[29] A given patent is therefore only useful for protecting an invention in the country in which that patent is granted. In other words, patent law is territorial in nature. When a patent application is published, the invention disclosed in the application becomes prior art and enters the public domain (if not protected by other patents) in countries where a patent applicant does not seek protection, the application thus generally becoming prior art against anyone (including the applicant) who might seek patent protection for the invention in those countries.

Commonly, a nation or a group of nations forms a patent office with responsibility for operating that nation's patent system, within the relevant patent laws. The patent office generally has responsibility for the grant of patents, with infringement being the remit of national courts.

There is a trend towards global harmonization of patent laws, with the World Trade Organization (WTO) being particularly active in this area.[citation needed] The TRIPS Agreement has been largely successful in providing a forum for nations to agree on an aligned set of patent laws. Conformity with the TRIPS agreement is a requirement of admission to the WTO and so compliance is seen by many nations as important. This has also led to many developing nations, which may historically have developed different laws to aid their development, enforcing patents laws in line with global practice.

Internationally, there are international treaty procedures, such as the procedures under the European Patent Convention (EPC) [constituting the European Patent Organisation (EPOrg)], that centralize some portion of the filing and examination procedure. Similar arrangements exist among the member states of ARIPO and OAPI, the analogous treaties among African countries, and the nine CIS member states that have formed the Eurasian Patent Organization. A key international convention relating to patents is the Paris Convention for the Protection of Industrial Property, initially signed in 1883. The Paris Convention sets out a range of basic rules relating to patents, and although the convention does not have direct legal effect in all national jurisdictions, the principles of the convention are incorporated into all notable current patent systems. The most significant aspect of the convention is the provision of the right to claim priority: filing an application in any one member state of the Paris Convention preserves the right for one year to file in any other member state, and receive the benefit of the original filing date. Another key treaty is the Patent Cooperation Treaty (PCT), administered by WIPO and covering more than 150 countries. The Patent Cooperation Treaty provides a unified procedure for filing patent applications to protect inventions in each of its contracting states. A patent application filed under the PCT is called an international application, or PCT application.

A patent is requested by filing a written application at the relevant patent office. The person or company filing the application is referred to as "the applicant". The applicant may be the inventor or its assignee. The application contains a description of how to make and use the invention that must provide sufficient detail for a person skilled in the art (i.e., the relevant area of technology) to make and use the invention. In some countries there are requirements for providing specific information such as the usefulness of the invention, the best mode of performing the invention known to the inventor, or the technical problem or problems solved by the invention. Drawings illustrating the invention may also be provided.

The application also includes one or more claims that define what a patent covers or the "scope of protection".

After filing, an application is often referred to as "patent pending". While this term does not confer legal protection, and a patent cannot be enforced until granted, it serves to provide warning to potential infringers that if the patent is issued, they may be liable for damages.[31][32][33]

Once filed, a patent application is "prosecuted". A patent examiner reviews the patent application to determine if it meets the patentability requirements of that country. If the application does not comply, objections are communicated to the applicant or their patent agent or attorney through an Office action, to which the applicant may respond. The number of Office actions and responses that may occur vary from country to country, but eventually a final rejection is sent by the patent office, or the patent application is granted, which after the payment of additional fees, leads to an issued, enforceable patent. In some jurisdictions, there are opportunities for third parties to bring an opposition proceeding between grant and issuance, or post-issuance.

Once granted the patent is subject in most countries to renewal fees to keep the patent in force. These fees are generally payable on a yearly basis. Some countries or regional patent offices (e.g. the European Patent Office) also require annual renewal fees to be paid for a patent application before it is granted.

The costs of preparing and filing a patent application, prosecuting it until grant and maintaining the patent vary from one jurisdiction to another, and may also be dependent upon the type and complexity of the invention, and on the type of patent.

The European Patent Office estimated in 2005 that the average cost of obtaining a European patent (via a Euro-direct application, i.e. not based on a PCT application) and maintaining the patent for a 10-year term was around €32,000.[34] Since the London Agreement entered into force on May 1, 2008, this estimation is however no longer up-to-date, since fewer translations are required.

In the United States, in 2000 the cost of obtaining a patent (patent prosecution) was estimated to be from $10,000 to $30,000 per patent.[35] When patent litigation is involved (which in year 1999 happened in about 1,600 cases compared to 153,000 patents issued in the same year[35]), costs increase significantly: although 95% of patent litigation cases are settled out of court,[36] those that reach the courts have legal costs on the order of a million dollars per case, not including associated business costs.[37]

A defensive publication is the act of publishing a detailed description of a new invention without patenting it, so as to establish prior art and public identification as the creator/originator of an invention, although a defensive publication can also be anonymous. A defensive publication prevents others from later being able to patent the invention.

A trade secret is information that is intentionally kept confidential and that provides a competitive advantage to its possessor. Trade secrets are protected by non-disclosure agreement and labour law, each of which prevents information leaks such as breaches of confidentiality and industrial espionage. Compared to patents, the advantages of trade secrets are that the value of a trade secret continues until it is made public,[38] whereas a patent is only in force for a specified time, after which others may freely copy the invention; does not require payment of fees to governmental agencies or filing paperwork;[38] has an immediate effect;[38] and does not require any disclosure of information to the public.[38] The key disadvantage of a trade secret is its vulnerability to reverse engineering.[39]

Primary incentives embodied in the patent system include incentives to invent in the first place; to disclose the invention once made; to invest the sums necessary to experiment, produce and market the invention; and to design around and improve upon earlier patents.[40]

Patents provide incentives for economically efficient research and development (R&D).[41] A study conducted annually by the Institute for Prospective Technological Studies (IPTS) shows that the 2,000 largest global companies invested more than 430 billion euros in 2008[42] in their R&D departments. If the investments can be considered as inputs of R&D, real products and patents are the outputs. Based on these groups, a project named Corporate Invention Board, had measured and analyzed the patent portfolios to produce an original picture[43] of their technological profiles. Supporters of patents argue that without patent protection, R&D spending would be significantly less or eliminated altogether, limiting the possibility of technological advances or breakthroughs.[citation needed] Corporations would be much more conservative about the R&D investments they made, as third parties would be free to exploit any developments. This second justification is closely related to the basic ideas underlying traditional property rights.[40][specify] Specifically, "[t]he patent internalizes the externality by giving the [inventor] a property right over its invention."[44] A 2008 study by Yi Quan of Kellogg School of Management showed that countries instituting patent protection on pharmaceuticals did not necessarily have an increase in domestic pharmaceutical innovation. Only countries with "higher levels of economic development, educational attainment, and economic freedom" showed an increase. There also appeared to be an optimal level of patent protection that increased domestic innovation.[45]

In accordance with the original definition of the term "patent", patents are intended to facilitate and encourage disclosure of innovations into the public domain for the common good. Thus patenting can be viewed as contributing to open hardware after an embargo period (usually of 20 years). If inventors did not have the legal protection of patents, in many cases, they might prefer or tend to keep their inventions secret (e.g. keep trade secrets).[46] Awarding patents generally makes the details of new technology publicly available, for exploitation by anyone after the patent expires, or for further improvement by other inventors. Furthermore, when a patent's term has expired, the public record ensures that the patentee's invention is not lost to humanity.[40][specify]

In many industries (especially those with high fixed costs and either low marginal costs or low reverse engineering costs — computer processors, and pharmaceuticals for example), once an invention exists, the cost of commercialization (testing, tooling up a factory, developing a market, etc.) is far more than the initial conception cost. (For example, the internal rule of thumb at several computer companies in the 1980s was that post-R&D costs were 7-to-1.)[citation needed]

One effect of modern patent usage is that a small-time inventor, who can afford both the patenting process and the defense of the patent,[47] can use the exclusive right status to become a licensor. This allows the inventor to accumulate capital from licensing the invention and may allow innovation to occur because he or she may choose not to manage a manufacturing buildup for the invention. Thus the inventor's time and energy can be spent on pure innovation, allowing others to concentrate on manufacturability.[48]

Another effect of modern patent usage is to both enable and incentivize competitors to design around (or to "invent around" according to R S Praveen Raj) the patented invention.[49] This may promote healthy competition among manufacturers, resulting in gradual improvements of the technology base.[50] This may help augment national economies and confer better living standards to the citizens. The 1970 Indian Patent Act[51] allowed the Indian pharmaceutical industry to develop local technological capabilities in this industry. This act coincided with the transformation of India from a bulk importer of pharmaceutical drugs to a leading exporter.[citation needed] The rapid evolution of Indian pharmaceutical industry since the mid-1970s highlights the fact that the design of the patent act was instrumental in building local capabilities even in a developing country like India.[52] This was possible because for many years prior to its membership in the World Trade Organization (WTO), India did not recognize product patents for pharmaceuticals. Without product patents with which to contend, Indian pharmaceutical companies were able to churn out countless generic drugs, establishing India as one of the leading generic drug manufacturers in the world. Yet in 2005, because of its obligations under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), India was compelled to amend its laws to provide product patent protection to pharmaceuticals. In an attempt to satisfy the competing demands for inexpensive drugs and effective intellectual property protection, the Indian government created a law that afforded protection to pharmaceuticals only if they constituted brand new chemical substances or enhanced the therapeutic “efficacy” of known substances. This law, which is codified under section 3(d) of the Patents (Amendment) Act of 2005,7 has not sat well with some MNCs, including the Swiss company Novartis. Following the denial of a patent for its leukemia drug, Glivec, Novartis challenged the validity of section 3(d) under TRIPS and the Indian Constitution. The Indian Supreme Court ruled against Novartis in a decision that has, and will continue to have, broad implications for MNCs, the Indian pharmaceutical industry, and people around the world in need of affordable drugs.[53]

Legal scholars, economists, activists, policymakers, industries, and trade organizations have held differing views on patents and engaged in contentious debates on the subject. Critical perspectives emerged in the nineteenth century that were especially based on the principles of free trade.[54]:262–263 Contemporary criticisms have echoed those arguments, claiming that patents block innovation and waste resources (e.g. with patent-related overheads) that could otherwise be used productively to improve technology.[55][56][57] These and other research findings that patents decreased innovation because of the following mechanisms:

Broad patents prevent companies from commercializing products and hurt innovation.[65] In the worst case, such broad patents are held by non-practicing entities (patent trolls), which do not contribute to innovation.[66][67] Enforcement by patent trolls of poor quality patents [68] has led to criticism of the patent office as well as the system itself.[69] For example, in 2011, United States business entities incurred $29 billion in direct costs because of patent trolls.[70] Lawsuits brought by "patent assertion companies" made up 61% of all patent cases in 2012, according to the Santa Clara University School of Law.[71]

Patents apply a "one size fits all" model to industries with differing needs,[72] that is especially unproductive for the software industry.[73]

Rent-seeking by owners of pharmaceutical patents have also been a particular focus of criticism, as the high prices they enable puts life-saving drugs out of reach of many people.[74]

Boldrin and Levine conclude "Our preferred policy solution is to abolish patents entirely and to find other legislative instruments, less open to lobbying and rent seeking, to foster innovation when there is clear evidence that laissez-faire undersupplies it."[75][76] Abolishing patents may be politically challenging in some countries[citation needed], however, as the primary economic theories supporting patent law hold that inventors and innovators need patents to recoup the costs associated with research, inventing, and commercializing;[41] this reasoning is weakened if the new technologies decrease these costs.[77] A 2016 paper argued for substantial weakening of patents because current technologies (e.g. 3D printing, cloud computing, synthetic biology, etc.) have reduced the cost of innovation.[77]

Several authors have argued for developing defensive prior art to prevent patenting based on obviousness using lists [83] or algorithms.[84] For example, a Professor of Law at the University of North Carolina School of Law, has demonstrated a method to protect DNA research.,[83] which could apply to other technology. Chin wrote an algorithm to generate 11 million "obvious" nucleotide sequences to count as prior art and his algorithmic approach has already[85] proven effective at anticipating prior art against oligonucleotide composition claims filed since his publication of the list and has been cited by the U.S. patent office a number of times.[86] More recently, Joshua Pearce developed an open-source algorithm for identifying prior art for 3D printing materials to make such materials obvious by patent standards.[84] As the 3-D printing community is already grappling with legal issues,[87] this development was hotly debated in the technical press.[88][89][90] Chin made the same algorithem-based obvious argument in DNA probes.[86]

^Charles Anthon, A Classical Dictionary: Containing An Account of the Principal Proper Names Mentioned in Ancient Authors, And Intended To Elucidate All The Important Points Connected With The Geography, History, Biography, Mythology, And Fine Arts Of The Greeks And Romans Together With An Account Of Coins, Weights, And Measures, With Tabular Values Of The Same, Harper & Bros, 1841, page 1273.

^Phylarchus of Naucratis, "The Deipnosophists, or, Banquet of the Learned of Athenæus", Translated from Ancient Greek by H.Bohn 12:20, p.835

^"Blackstone's Commentaries". Archived from the original on 2008-02-24. Retrieved 2008-02-24. THE king's grants are alſo matter of public record. For, as St. Germyn ſays, the king's excellency is ſo high in the law, that no freehold may be given to the king, nor derived from him, but by matter of record. And to this end a variety of offices are erected, communicating in a regular ſubordination one with another, through which all the king's grants muſt paſs, and be tranſcribed, and enrolled; that the ſame may by narrowly inſpected by his officers, who will inform him if any thing contained therein is improper, or unlawful to be granted. Theſe grants, whether of lands, honours, liberties, franchiſes, or ought beſides, are contained in charters, or letters patent, that is, open letters, literae patentes: ſo called becauſe they are not ſealed up, but expoſed to open view, with the great ſeal pendant at the bottom; and are uſually directed or addreſſed by the king to all his ſubjects at large. And therein they differ from certain other letters of the king, ſealed alſo with his great ſeal, but directed to particular perſons, and for particular purpoſes: which therefore, not being proper for public inſpection, are cloſed up and ſealed on the outſide, and are thereupon called writs cloſe, literae clauſae; and are recorded in the cloſe-rolls, in the ſame manner as the others are in the patent-rolls...

^Joseph M. Gabriel, Medical Monopoly: Intellectual Property Rights and the Origins of the Modern Pharmaceutical Industry. University of Chicago Press (2014)

^ abc"A patent is not the grant of a right to make or use or sell. It does not, directly or indirectly, imply any such right. It grants only the right to exclude others. The supposition that a right to make is created by the patent grant is obviously inconsistent with the established distinctions between generic and specific patents, and with the well-known fact that a very considerable portion of the patents granted are in a field covered by a former relatively generic or basic patent, are tributary to such earlier patent, and cannot be practiced unless by license thereunder." – Herman v. Youngstown Car Mfg. Co., 191 F. 579, 584–85, 112 CCA 185 (6th Cir. 1911)

^Bessen, James; Meurer, Michael James (2008). Patent failure: how judges, bureaucrats, and lawyers put innovators at risk. p. 132. ISBN0-691-13491-X.. Based on an American Intellectual Property Law Association (AIPLA) survey of patent lawyers (2005), and court documents for a sample of 89 court cases where one side was ordered to pay the other side's legal fees.The containing chapter ('The Costs of Disputes') also tries to quantify associated business costs.

^Jim Kerstetter. 2012. How much is that patent lawsuit going to cost you?. CNET. "Archived copy". Archived from the original on 2016-08-23. Retrieved 2016-08-20.CS1 maint: Archived copy as title (link)

^McKendrick, J., 2012. Time to eliminate patents altogether? Fed paper urges more open innovation. ZDNet. Available at: "Archived copy". Archived from the original on 2016-08-21. Retrieved 2016-08-20.CS1 maint: Archived copy as title (link)